Thursday, November 22, 2012

No hiding the fact that this blog is struggling. We may close up shop and restart another effort, time will tell.
In the meantime, please enjoy the holiday, don't hurt anyone at those blasted Black Friday consumer riots, enjoy your family and don't get too upset with their foibles and hug your children. They're facing the not-so-nice aspect of being raised in a socialist nation and will need your support and guidance on how to change it.
Enjoy the meal and the family aspect of the holiday. We're in the waning days of this once great country and we might as well raise a good glass of wine to toast our good fortune thus far. Peace, dear reader.

Wednesday, November 7, 2012

The number of people out of work in the euro zone climbed to another record high in September, the latest evidence of the damage the region's long-running fiscal crisis is doing to the real economy as governments cut spending to try to control their debts.
Eurostat, the European Union's official statistics agency, said Wednesday that 18.49 million people were unemployed in the euro zone in September, after 146,000 more people lost their jobs during the month. The total is the highest on record for the 17 nations that now use the euro, based on data going back to 1995.

Michael Pento of Pento Portfolio Strategies contends the open-ended Fed money printing is creating “. . . a fictitious world of artificially low interest rates.” Pento says, “We need to move quickly towards a balanced budget . . . yes, it will be painful for a lot of people.” If we don’t change course, Pento says, “A financial collapse is inevitable . . . the free market will force this Fiscal Cliff upon us. There is no way around it.”

“A financial collapse is inevitable – the free market will force this Fiscal Cliff upon us. There is no way around it.”

Not a bad little docu-drama about the onset of a US dollar collapse. There are a few inconsistencies, I believe some of the fictional “market moves” depicted would not occur because gap limits would kick in and suspend the trading session. I also believe that a 1700 point drop in the DOW would trigger a banking holiday as opposed to a 2-hour trading halt.
But that said, this is the scenario nobody thinks is possible but really at the end of the day, it’s not like the US can print money and live on debt forever right? So when something cannot go on forever what happens when it stops?

Unless Congress acts before January, the fiscal cliff will eliminate almost 6 million jobs and send the unemployment rate to near 12 percent, the study warns. About $100 billion in spending cuts and about $400 billion in tax increases will go into effect in January unless Congress acts.

Anticipating the fall-out, companies are laying off workers, not filling jobs and delaying investments. Fear of the fiscal cliff has wiped out nearly 1 million jobs this year alone, the NAM study, called “Fiscal Shock: America’s Economic Crisis,” claims.

In the third quarter of 2011 the US Congress agreed to rather severe tax increases and spending cuts that would kick in as of January 2013, as a way to get a deal done to increase the debt ceiling. In addition, the Social Security payroll tax cut and extended unemployment benefits are also scheduled to go away in January. All told, if nothing changes, this abrupt shift in fiscal policy would result in a hit to the economy of about $650 billion, or a little more than 4% of GDP, at a time when the economy is likely growing less than 2% a year.

Let me break down the major components of the Fiscal Cliff:

Abolition of the Bush tax cuts, which amount to $265 billion, of which $55 billion is for the “wealthy” and $210 billion for the “middle class” (everyone else). Almost no one on either side of the aisle wants to actually go forward with axing the tax cuts for the middle class. Republicans want to hold on to the top-level tax cuts, and to my mind that’s a bargaining chip (see below).

The Budget Control Act, or the debt-ceiling deal, comes in at roughly $160 billion, with $110 billion of that in sequestration, mostly for defense; and there seems to be a growing consensus that not all of these cuts should be made.

The 2009 stimulus will also roll off (this is the 2% Social Security break and extended unemployment benefits). This amounts to $140 billion all on its own, or almost 1% of GDP. Almost everyone agrees that these tax cuts were supposed to be temporary.

The “ObamaCare” $24-billion tax increase on high-income households is almost sure to be allowed to go through.

Technically, there is $105 billion in the temporary “doc fix” and Alternative Minimum Tax, which every year are supposed to expire and every year are postponed, which of course allows Congress and the president (whoever is in control) to project lower deficits in the future, even though those cuts never happen.

If you add the $105 billion of fixes in #5 and the middle class tax cuts, you get $315 billion, or almost half of the Fiscal Cliff, which reduces the impact to 2% of GDP. Take some of the sting out of defense and you get to less than 0.5%.

“CEOs today are pensive about what to do next. They’re just sitting back, they’re not hiring as much, they’re probably not spending as much and so there’s a deceleration in the economy and we all start feeling it,” Fink told the network.

“In addition, we expected to have a little more resolution in Europe. We’re waiting for Spain to ask for help and accept conditionality and that’s been probably delayed by a couple weeks. So, you’ll have a little more uncertainty than we would have liked to have seen in Europe.”

Even if policymakers in the United States and Europe do avert disaster, market downturns are possible in the meantime.

“I think there are reasons totake some profits in the short term, and we have to look now and see how these things are going to be resolved,” Fink said.

Listening to the incessant chatter of confirmation bias from CNBC, you could be forgiven for thinking that earnings are ‘not that bad’. Headline-makers like AMZN, GOOG, and AAPL scare for a few moments but we are reassured back to numb BTFD-land by some disingenuous analyst (or worse a PM) who says he is buying with both hands and feet. The misleadingly top-down positive impression of looking at a ‘beats-to-total ratio’, suffers from one rather annoying bias (that often gets forgotten): analysts constantly revising their expectations throughout the reporting period, and hence rarely deviates from the current level of 71%. But, as Citi notes, if one examines results relative to analyst expectations prior to the reporting season, it’s clear just how disappointing Q3 has been - especially given the sell-side mark-downs already factored-in.

If one uses unrevised expectations - which simply anchor lower and make every succeeding number look relatively better and better as earnings season progresses in one direction or another - then the S&P 500′s earning surprises are even worse than Q2 – making the sixth quarter in a row of ‘missed’ pre-expectations…

government consumption exploded from a -.14 contraction to a .71 contribution

net exports (exports less imports) declined from a .23 contribution to a -.18detraction.

It is net exports that are most concerning. Since 1980 the global community has become very small due to advances in technology and communications. Globalization has made the U.S. very sensitive to changes in global economy due to the increasing demand for the products and services that we sell abroad. As we said previously:“Exports have made up roughly 40% of corporate profits since the end of the last recession. The recent announcements by CAT, FDX, NSC, UPS and others, all discussed the rising weakness with international trading partners – primarily in the Eurozone and China. Not surprisingly we saw a decrease of $0.3 Billion in exports in 2Q GDP. This was a 110% decrease from the previous estimate of a $3.1 billion increase. This decrease in exports is very important as it relates to current forward earnings estimates and the belief that the U.S. can remain decoupled from the rest of the world.“

Please keep in mind that these job cuts do not show up in the unemployment numbers yet. When big corporations announce the elimination of jobs, it often takes a while before those job losses actually take place.

Sadly, I believe that this is just the tip of the iceberg. I am convinced that the layoffs and the job losses are going to get a lot worse.

"The idea that living within your means is a form of austerity, and not (other than in exceptional circumstances) the elementary moral duty of people of honor, shows that, underlying the economic crisis is a profound moral crisis in western society." - Theodore Dalrymple

Tuesday, November 6, 2012

Did printing vast quantities of money work for the Weimar Republic? Nope. And it won't work for us either. If printing money was the secret to economic success, we could just print up a trillion dollars for every American and be done with it. The truth is that making everyone in America a trillionaire would not mean that we would all suddenly be wealthy. There would be the same amount of "real wealth" in our economy as before. But what it would do is render our currency meaningless and totally destroy faith in our financial system. Sadly, we have not learned the lessons that history has tried to teach us. Back in April 1919, it took 12 German marks to get 1 U.S. dollar. By December 1923, it took approximately 4 trillion German marks to get 1 U.S. dollar. So was the Weimar Republic better off after all of the "quantitative easing" that they did or worse off? Of course they were worse off. They destroyed their currency and wrecked all confidence in their financial system. There was an old joke that if you left a wheelbarrow full of money sitting around in the Weimar Republic that thieves would take the wheelbarrow and they would leave the money behind. Will things eventually get that bad in the United States someday?

Of course we are not going to see hyperinflation in the U.S. this week or this month.

But don't think that it will never happen.
The people of Germany never thought that it would happen to them, but it did.
The following is an excerpt from a Wikipedia article about the Weimar Republic. Take note of the similarities between what the Weimar Republic experienced and what we are going through today....

The cause of the immense acceleration of prices that occurred during the German hyperinflation of 1922–23 seemed unclear and unpredictable to those who lived through it, but in retrospect was relatively simple. The Treaty of Versailles imposed a huge debt on Germany that could be paid only in gold or foreign currency. With its gold depleted, the German government attempted to buy foreign currency with German currency, but this caused the German Mark to fall rapidly in value, which greatly increased the number of Marks needed to buy more foreign currency. This caused German prices of goods to rise rapidly which increase the cost of operating the German government which could not be financed by raising taxes. The resulting budget deficit increased rapidly and was financed by the central bank creating more money. When the German people realized that their money was rapidly losing value, they tried to spend it quickly. This increase in monetary velocity caused still more rapid increase in prices which created a vicious cycle. This placed the government and banks between two unacceptable alternatives: if they stopped the inflation this would cause immediate bankruptcies, unemployment, strikes, hunger, violence, collapse of civil order, insurrection, and revolution. If they continued the inflation they would default on their foreign debt. The attempts to avoid both unemployment and insolvency ultimately failed when Germany had both.

When the Weimar Republic first started rapidly printing money everything seemed fine at first. Economic activity was buzzing and unemployment was very low.
But as the following chart shows, when hyperinflation kicks in, it can happen very quickly. By late 1922, the effects of all of the money printing were really starting to hit the German economy....
Once you start printing money it is really, really hard to stop.
By late 1922, inflation was officially out of control. An article in The Economist described what happened next....

Prices roared up. So did unemployment, modest as 1923 began. As October ended, 19% of metal-workers were officially out of work, and half of those left were on short time. Feeble attempts had been made to stabilise prices. Some German states had issued their own would-be stable currency: Baden's was secured on the revenue of state forests, Hanover's convertible into a given quantity of rye. The central authorities issued what became known as “gold loan” notes, payable in 1935. Then, on November 15th, came the Rentenmark, worth 1,000 billion paper marks, or just under 24 American cents, like the gold mark of 1914.

Hyperinflation hurts the poor, the elderly and those on fixed incomes the worst. The following is an excerpt from a work by Adam Fergusson....

The rentier classes who depended on savings or pensions, and anyone on a fixed income, were soon in penury, their possessions sold. Barter often took over from purchase. By law rents could not be raised, which allowed employers to pay low wages and impoverished landlords in a country where renting was the norm. The professional classes -- lawyers, doctors, scientists, professors -- found little demand for their services. In due course, the trade unions, no longer able to strike for higher wages (often uncertain what to ask for, so fast became the mark's fall from day to day), went to the wall, too.

Workers regularly got wage increases during this time, but they never seemed to keep up with the horrible inflation that was raging all around them. So they steadily became poorer even though the amount of money they were bringing home was steadily increasing.
People started to lose all faith in the currency and in the financial system. This had an absolutely devastating effect on the German population. American author Pearl Buck was living in Germany at the time and the following is what she wrote about what she saw....

"The cities were still there, the houses not yet bombed and in ruins, but the victims were millions of people. They had lost their fortunes, their savings; they were dazed and inflation-shocked and did not understand how it had happened to them and who the foe was who had defeated them. Yet they had lost their self-assurance, their feeling that they themselves could be the masters of their own lives if only they worked hard enough; and lost, too, were the old values of morals, of ethics, of decency."

Of course not everyone in Germany was opposed to the rampant inflation that was happening. There were some business people that became very wealthy during this time. The hyperinflation rendered their past debts meaningless, and by investing paper money (that would soon be worthless) into assets that would greatly appreciate thanks to inflation, many of them made out like bandits.
The key was to take your paper money and spend it on something that would hold value (or even increase in value) as rapidly as possible.
The introduction of the Rentenmark brought an end to hyperinflation, but the damage to the stability of the German economy had been done. The German economy went through several wild swings which ultimately resulted in the rise of the Nazis. The following description of this time period is from an article by Alex Kurtagic....

The post-hyperinflationary credit crunch was, not surprisingly followed by a credit boom: starved of money and basic necessities for so long (do not forget the hyperinflation had come directly after defeat in The Great War), many funded lavish lifestyles through borrowing during the second half of the 1920s. We know how that ended, of course: in The Great Depression, which eventually saw the end of the Weimar Republic and the beginning of the National Socialist era.

By the end of the decade unemployment really started to take hold in Germany as the following statistics reveal....
September 1928 - 650,000 unemployed
September 1929 - 1,320,000 unemployed
September 1930 - 3,000,000 unemployed
September 1931 - 4,350,000 unemployed
September 1932 - 5,102,000 unemployed
January 1933 - 6,100,000 unemployed
By the end of 1932, over 30 percent of all German workers were unemployed. This created an environment where people were hungry for "change".
On January 30th, 1933 Hitler was sworn in as chancellor, and the rest is history.
So where will all of this money printing take America?
As I wrote about in a previous article, the amount of excess reserves that banks have stashed with the Federal Reserve has risen from about 9 billion dollars on September 10th, 2008 to about 1.5 trillion dollars today....
What is going to happen to inflation when all of those excess reserves start flowing out into the regular economy?
It won't be pretty.
Just consider the ominous words that Philadelphia Fed President Charles Plosser used earlier this week....

"Inflation is going to occur when excess reserves of this huge balance sheet begin to flow outside into the real economy. I can't tell you when that's going to happen.""When that does begin if we don't engage in a fairly aggressive and effective policy of preventing that from happening, there's no question in my mind that that will lead to lots of inflation."

Oh great.
And so what is Bernanke doing?
He is printing up lots more money.
But isn't this supposed to help the economy?
I wouldn't count on it.
According to USA Today, the following is what Plosser says about the effect that QE3 is likely to have on our economy....

"We are unlikely to see much benefit to growth or to employment from further asset purchases."

But we will get more inflation, so our monthly budgets will not go as far as they did before.
The other day I was going to the supermarket, and my wife told me that she wanted some croissants. When I got to the bakery section I discovered that it was $4.49 for just four croissants.
If it had just been for me, I would have never gotten them. I am the kind of shopper that doesn't even want to look at something unless there is a sale tag on it.
But I did get the croissants for my wife.
Unfortunately, thanks to Federal Reserve Chairman Ben Bernanke soon none of us may be able to afford to buy croissants.
I still remember the days when I could fill up my entire shopping cart for 20 bucks.
And it was not that long ago - I am talking about the late 90s.
But paying more for food is not the greatest danger we are facing. Bernanke is destroying the credibility of our currency and he is destroying faith in our financial system.
Bernanke may believe that he is preventing the next great collapse from happening, but the truth is that what he is doing is going to make the eventual collapse far worse.
Better get your wheelbarrows ready.

The global debt crisis has reached a dangerous new phase. Unfortunately, most Americans are not taking notice of it yet because most of the action is taking place overseas, and because U.S. financial markets are riding high. But just because the global economic crisis is unfolding at the pace of a "slow-motion train wreck" right now does not mean that it isn't incredibly dangerous. As I have written about previously, the economic collapse is not going to be a single event. Yes, there will be days when the Dow drops by more than 500 points. Yes, there will be days when the reporters on CNBC appear to be hyperventilating. But mostly there will be days of quiet despair as the global economic system slides even further toward oblivion. And right now things are clearly getting worse. Things in Greece are much worse than they were six months ago. Things in Spain are much worse than they were six months ago. The same thing could be said for Italy, France, Japan, Argentina and a whole bunch of other nations. The entire global economy is slowing down, and we are entering a time period that is going to be incredibly painful for everyone. At the moment, the U.S. is still experiencing a "sugar high" from unprecedented fiscal and monetary stimulus, but when that "sugar high" wears off the hangover will be excruciating. Reckless borrowing, spending and money printing has bought us a brief period of "economic stability", but our foolish financial decisions will also make our eventual collapse far worse than it might have been. So don't think for a second that the U.S. will somehow escape the coming global economic crisis. The truth is that before this is all over we will be seen as one of the primary causes of the crisis.

The following are 21 signs that the global economic crisis is about to go to a whole new level....#1 Bank of Israel Governor Stanley Fischer says that the global economy is "awfully close" to recession.#2 It was announced last week that the unemployment rate in Greece has reached an all-time high of 25.1 percent. Unemployment among those 24 years old or younger is now more than 54 percent. Back in April 2010, the unemployment rate in Greece was only sitting at 11.8 percent.#3 The IMF is warning that Greek debt may have to be "restructured" yet again.#4 Swedish Finance Minister Anders Borg says that it is "probable" that Greece will leave the euro, and that it might happen within the next six months.#5 An angry crowd of approximately 40,000 angry Greeks recently descended on Athens to protest a visit by German Chancellor Angela Merkel...

From high-school students to pensioners, tens of thousands of Greek demonstrators swarmed into Athens yesterday to show the visiting German Chancellor, Angela Merkel, their indignation at their country's continued austerity measures.Flouting the government's ban on protests, an estimated 40,000 people – many carrying posters depicting Ms Merkel as a Nazi – descended on Syntagma Square near the parliament building. Masked youths pelted riot police with rocks as the officers responded with tear gas.The authorities had deployed 7,000 police, water cannon and a helicopter. Snipers were placed on rooftops to ensure the German leader's safety.

#6 The debt crisis is Argentina is becoming increasingly troublesome.#7 The government debt to GDP ratio in Italy is expected to hit 126 percent this year. In Greece, it is expected to hit 198 percent. In Japan, it is expected to hit a whopping 237 percent.#8 Standard & Poor’s has slashed the credit rating on Spanish government debt to BBB-, which is just one level above junk status.#9 Back in the year 2000, the ratio of total debt to GDP in Spain was 192 percent. By 2011, it had reached 363 percent.#10 Record amounts of money are being pulled out of Spanish banks, and many large Spanish banks are rapidly heading toward insolvency.#11 Manufacturing activity in Spain has contracted for 17 months in a row.#12 It is being projected that home prices in Spain will fall by another 15 percent by the end of 2013.#13 The unemployment rate in France is now above 10 percent, and it has risen for 16 months in a row.#14 There are signs that Switzerland may be preparing for "major civil unrest" throughout Europe.#15 The former top economist at the European Central Bank says that the ECB has fallen into a state of "panic" as it desperately tries to solve the European debt crisis.#16 According to a recent IMF report, European banks may need to sell off 4.5 trillion dollars in assets over the next 14 months in order to meet strict new capital requirements.#17 In August, U.S. exports dropped to the lowest level that we have seen since last February.#18 Economics Professor Barry Eichengreen is very concerned about what is coming next for stocks in the United States...

"I’m worried that stock markets in the United States in particular have gotten ahead of economic growth"

#19 During the week ending October 3rd, investors pulled more than 10 billion dollars out of U.S. mutual funds. Overall, a total of more than 100 billion dollars has been pulled out of U.S. mutual funds so far this year.#20 As I wrote about the other day, the IMF is warning that there is an "alarmingly high" risk of a deeper global economic slowdown.#21 When shipping companies start laying off workers, that is one of the best signs that economic activity is slowing down. That is why it was so troubling when it was announced that FedEx is planning to get rid of "several thousand" workers over the coming months. According to AFP, "its business is being hit by the global economic slowdown".
For even more signs that the global economy is rapidly crumbling, please see my previous article entitled "The Largest Economy In The World Is Imploding Right In Front Of Our Eyes".
So is anyone doing well right now?
Yes, it turns out that QE3 is padding the profits of the big banks in the United States and making the wealthy even wealthier just like I warned that it would.
According to the Washington Post, QE3 is helping the big banks much more than it is helping consumers. Is this what the Fed intended all along?...

JPMorgan Chase and Wells Fargo, the nation’s largest mortgage lenders, said Friday they won’t make home loans much cheaper for consumers, even as they reported booming profits from that business.Those bottom lines have been padded by federal initiatives to stimulate the economy. The Federal Reserve is spending $40 billion a month to reduce mortgage rates to encourage Americans to buy homes. Instead, its policies may be generating more benefits for banks than borrowers.

So exactly how much has QE3 helped out the big banks? Just check out these numbers...

Revenue from mortgages was up 57 percent in the third quarter compared with the same period last year at JPMorgan and more than 50 percent up at Wells Fargo.

But should we expect anything else from the Federal Reserve?
The American people are trusting the Fed to protect our economy, and yet they cannot even protect their own shipments of money. In fact, the Fed recently lost a large shipment of new $100 bills.
Or perhaps could letting people steal money from their own trucks be another way that the Fed is trying to "stimulate the economy"?
Stranger things have happened.
In any event, the truth is that the U.S. economy and the U.S. financial system are unsustainable from any angle that you want to look at things.
We are drowning in government debt, we are drowning in consumer debt, Wall Street has been transformed into a high risk casino where our largest financial institutions are putting it all on the line on a daily basis, we are consuming far more than we are producing, there are more than 100 million Americans on welfare and we are stealing more than 100 million dollars an hour from future generations to pay for it all.
Anyone that believes that we are in "good shape" does not know the first thing about economics.
Sadly, the U.S. is not alone. Nations all over the globe are experiencing similar problems.
The global economic crisis is just beginning and it is going to get much, much worse.
I hope that you ready.

The future of the United States of America is being systematically destroyed by our politicians, but unfortunately most Americans don't really grasp exactly what is happening. 30 years ago, our national debt had just crossed the one trillion dollar mark. Just recently, it crossed the 16 trillion dollar mark. Prior to every election, politicians from both parties swear up and down that they will do something about our exploding debt, but it never happens. Once again this year, our politicians are making all kinds of grand promises about getting U.S. government finances under control. But they are also promising all kinds of new plans and programs which are going to cost a lot more money on top of what we are already spending. For the average American, all of this can be incredibly confusing. That is why I have put together a list of facts about the debt and U.S. government finances below. These are things that every voter should know. The federal government is stealing more than a trillion dollars a year from our children and our grandchildren, and they are spending that money in some of the most foolish ways that you could ever imagine. We have accumulated the largest mountain of debt in the history of the world, but our politicians just can't help themselves - they appear to be absolutely addicted to spending money. If we continue on the path that we are currently on, our entire financial system and our entire economy will be destroyed by all of this debt. Time is running out and urgent action is needed to address this crisis.

Many of our founding fathers attempted to warn us about the dangers of government debt. For example, Thomas Jefferson once said the following...

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.

Where would we be today if such an amendment had been added to our Constitution?
How much brighter would our future be if the federal government had been forced to only spend what it took in all these years?
Those are very good questions.
The following are 55 facts about the debt and U.S. government finances that every American voter should know....#1 While Barack Obama has been president, the U.S. government has spent about 11 dollars for every 7 dollars of revenue that it has actually brought in.#2 During the fiscal year that just ended, the U.S. government took in 2.449 trillion dollars but it spent 3.538 trillion dollars.#3 During fiscal year 2011, over a trillion dollars of government money was spent on 83 different welfare programs, and those numbers do not even include Social Security or Medicare.#4 Over the past four years, welfare spending has increased by 32 percent. In inflation-adjusted dollars, spending on those programs has risen by 378 percent over the past 30 years. At this point, more than 100 million Americans are enrolled in at least one welfare program run by the federal government. Once again, these figures do not even include Social Security or Medicare.#5 Over the past year, the number of Americans getting a free cell phone from the federal government has grown by 43 percent. Now more than 16 million Americans are enjoying what has come to be known as an "Obamaphone".#6 When Barack Obama first entered the White House, about 32 million Americans were on food stamps. Now, nearly 47 million Americans are on food stamps. And this has happened during what Obama refers to as "an economic recovery".#7 The U.S. government recently spent 27 million dollars on pottery classes in Morocco.#8 The U.S. Department of Agriculture recently spent $300,000 to encourage Americans to eat caviar at a time when more families than ever are having a really hard time just trying to put any food on the table at all.#9 During 2012, the National Science Foundation spent $516,000 to support the creation of a video game called "Prom Week", which apparently simulates "all the social interactions of the event."#10 The U.S. Department of Agriculture gave the largest snack food maker in the world (PepsiCo Inc.) a total of 1.3 million dollars in corporate welfare that was used to help build "a Greek yogurt factory in New York."#11 The National Science Foundation recently gave researchers at Purdue University $350,000. They used part of that money to help fund a study that discovered that if golfers imagine that a hole is bigger it will help them with their putting.#12 If you can believe it, $10,000 from the federal government was actually used to purchase talking urinal cakes up in Michigan.#13 The National Science Foundation recently gave a whopping $697,177 to a New York City-based theater company to produce a musical about climate change.#14 The National Institutes of Health recently gave $666,905 to a group of researchers that is studying the benefits of watching reruns on television.#15 The National Science Foundation has given 1.2 million dollars to a team of "scientists" that is spending part of that money on a study that is seeking to determine whether elderly Americans would benefit from playing World of Warcraft or not.#16 The National Institutes of Health recently gave $548,731 to a team of researchers that concluded that those that drink heavily in their thirties also tend to feel more immature.#17 The National Science Foundation recently spent $30,000 on a study to determine if "gaydar" actually exists. This is the conclusion that the researchers reached at the end of the study....

"Gaydar is indeed real and… its accuracy is driven by sensitivity to individual facial features"

#18 Back in 2011, the National Institutes of Health spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.#19 The U.S. government spends more on the military than China, Russia, Japan, India, and the rest of NATO combined. In fact, the United States accounts for 41.0% of all military spending on the planet. China is next with only 8.2%.#20 In a previous article, I noted that close to 500,000 federal employees now make at least $100,000 a year.#21 In 2006, only 12 percent of all federal workers made $100,000 or more per year. Now, approximately 22 percent of all federal workers do.#22 If you can believe it, there are 77,000 federal workers that make more than the governors of their own states do.#23 During 2010, the average federal employee in the Washington D.C. area received total compensation worth more than $126,000.#24 The U.S. Department of Defense had just nine civilians earning $170,000 or more back in 2005. When Barack Obama became president, the U.S. Department of Defense had 214 civilians earning $170,000 or more. By June 2010, the U.S. Department of Defense had 994 civilians earning $170,000 or more.#25 During 2010, compensation for federal employees came to a grand total of approximately 447 billion dollars.#26 If you can believe it, close to 15,000 retired federal employees are currently collecting federal pensions for life worth at least $100,000 annually. That list includes such names as Newt Gingrich, Bob Dole, Trent Lott, Dick Gephardt and Dick Cheney.#27 During 2010, the federal government spent $33,387 on the hair care needs of U.S. Senators.#28 During 2010, U.S. Senators pulled $72,370 out of the "Senate Restaurant Fund".#29 During 2010, an average of $4,005,900 of U.S. taxpayer money was spent on "personal" and "office" expenses per Senator.#30 In 2013, 3.7 million dollars will be spent to support the lavish lifestyles of former presidents such as George W. Bush and Bill Clinton.#31 During 2011, the federal government spent a total of 1.4 BILLION dollars just on the Obamas.#32 When you combine all federal government spending, all state government spending and all local government spending, it comes to approximately 41 percent of U.S. GDP. But don't worry, all of our politicians insist that this is not socialism.#33 As I have written about previously, less than 30 percent of all Americans lived in a home where at least one person received financial assistance from the federal government back in 1983. Today, that number is sitting at an all-time high of 49 percent.#34 Back in 1990, the federal government accounted for just 32 percent of all health care spending in America. This year, it is being projected that the federal government will account for more than 50 percent of all health care spending in the United States.#35 The number of Americans on Medicaid soared from 34 million in 2000 to 54 million in 2011, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.#36 In one of my previous articles, I discussed how it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.#37 If you can believe it, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years. That comes to approximately $328,404 for each and every household in the United States.#38 In the United States today, more than 61 million Americans receive some form of Social Security benefits. By 2035, that number is projected to soar to a whopping 91 million.#39 Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.#40 When Barack Obama first took office, the U.S. national debt was about 10.6 trillion dollars. Now it is about 16.2 trillion dollars. That is an increase of 5.6 trillion dollars in less than 4 years.#41 The federal government has now run a budget deficit of more than a trillion dollars for four years in a row.#42 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.#43 If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.#44 Some suggest that "taxing the rich" is the answer. Well, if Bill Gates gave every single penny of his entire fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.#45 If the federal government used GAAP accounting standards like publicly traded corporations do, the real federal budget deficit for 2011 would have been 5 trillion dollars instead of 1.3 trillion dollars.#46 The United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.#47 At this point, the United States government is responsible for more than a third of all the government debt in the entire world.#48 The amount of U.S. government debt held by foreigners is about 5 times larger than it was just a decade ago.#49 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.#50 The U.S. national debt is now more than 37 times larger than it was when Richard Nixon took us off the gold standard.#51 The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.#52 The U.S. national debt jumped more on the very first day of fiscal year 2013 than it did from 1776 to 1941 combined.#53 Historically, the interest rate on 10 year U.S. Treasuries has averaged 6.68 percent. If the average interest rate on U.S. government debt rose to that level today, the U.S. government would find itself spending more than a trillion dollars per year just on interest on the national debt.#54 A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.#55 Boston University economist Laurence Kotlikoff is warning that the U.S. government is facing a gigantic tsunami of unfunded liabilities in the coming years that we are counting on our children and our grandchildren to pay. Kotlikoff speaks of a "fiscal gap" which he defines as "the present value difference between projected future spending and revenue". His calculations have led him to the conclusion that the federal government is facing a fiscal gap of 222 trillion dollars in the years ahead.
Please share this article with as many people as you can. Time is running out to fix these problems.

Have you ever laid in bed awake at night with a knot in your stomach because you didn't know how your family was possibly going to make it through the next month financially? Have you ever felt the desperation of not being able to provide the basic necessities for your family even though you tried as hard as you could? All over America tonight, there are millions of desperate families that are being ripped apart by this economy. There aren't nearly enough jobs, and millions of Americans that actually do have jobs aren't making enough to even provide the basics for their families. When you have tried everything that you can think of and nothing works, it can be absolutely soul crushing. Today, one of my regular readers explained that he was not going to be online for a while because his power had been turned off. He has been out of work for quite a while, and eventually the money runs out. Have you ever been there? If you have ever experienced that moment, you know that it stays with you for the rest of your life. If you are single that is bad enough, but when you have to look into the eyes of your children and explain to them why there won't be any dinner tonight or why they have to move into a homeless shelter it can feel like someone has driven a stake into your heart. In this article you will find a lot of very shocking economic statistics. But please remember that behind each statistic are the tragic stories of millions of desperately hurting American families.

Over the past decade, things have steadily gotten worse for American families no matter what our politicians have tried. Poverty and government dependence continue to rise. The cost of living continues to go up and incomes continue to go down. It is truly frightening to think about what this country is going to look like if current trends continue.

The following are 37 facts that show how cruel this economy has been to millions of desperate American families...1. One recent survey discovered that 40 percent of all Americans have $500 or less in savings.2. A different recent survey found that 28 percent of all Americans do not have a single penny saved for emergencies.3. In the United States today, there are close to 10 million households that do not have a single bank account. That number has increased by about a million since 2009.4. Family homelessness in the Washington D.C. region (one of the wealthiest regions in the entire country) has risen 23 percent since the last recession began.5. The number of Americans living in poverty has increased by about 6 million over the past four years.6. Median household income has fallen for four years in a row. Overall, it has declined by more than $4000 over the past four years.7. 62 percent of middle class Americans say that they have had to reduce household spending over the past year.8. According to a survey conducted by the Pew Research Center, 85 percent of middle class Americans say that it is more difficult to maintain a middle class standard of living today than it was 10 years ago.9. In the United States today, 77 percent of all Americans are living to paycheck to paycheck at least some of the time.10. In the United States today, more than 41 percent of all working age Americans are not working.11. Since January 2009, the "labor force" in the United States has increased by 827,000, but "those not in the labor force" has increased by 8,208,000. This is how they have gotten the unemployment numbers to "come down".12. Sadly, 60 percent of the jobs lost during the last recession were mid-wage jobs, but 58 percent of the jobs created since then have been low wage jobs.13. Today, about one out of every four workers in the United States brings home wages that are at or below the federal poverty level.14. Right now, the United States actually has a higher percentage of workers doing low wage work than any other major industrialized nation does.15. At this point, less than 25 percent of all jobs in the United States are "good jobs", and that number continues to shrink.16. There are now 20.2 million Americans that spend more than half of their incomes on housing. That represents a 46 percent increase from 2001.17. According to USA Today, many Americans have actually seen their water bills triple over the past 12 years.18. Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.19. In 1999, 64.1 percent of all Americans were covered by employment-based health insurance. Today, only 55.1 percent are covered by employment-based health insurance.20. Health insurance premiums rose faster than the overall rate of inflation in 2011 and that is happening once again in 2012. In fact, it has been happening for a very long time.21. According to one recent survey, approximately 10 percent of all employers in the United States plan to drop health coverage when key provisions of the new health care law kick in less than two years from now.22. Back in 1983, the bottom 95 percent of all income earners had 62 cents of debt for every dollar that they earned. By 2007, that figure had soared to $1.48.23. Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago.24. Total consumer debt in the United States has risen by 1700 percent since 1971.25. Recently it was announced that total student loan debt in the United States has passed the one trillion dollar mark.26. According to one recent survey, approximately one-third of all Americans are not paying their bills on time at this point.27. Right now, approximately 25 million American adults are living at home with their parents.28. The percentage of Americans that find that they are able to retire when they reach retirement age continues to decline. According to one new survey, 70 percent of middle class Americans plan to work during retirement and 30 percent plan to work until they are at least 80 years old.29. The U.S. economy lost more than 220,000 small businesses during the recent recession.30. In 2010, the number of jobs created at new businesses in the United States was less than half of what it was back in the year 2000.31. Back in 2007, 19.2 percent of all American families had a net worth of zero or less than zero. By 2010, that figure had soared to 32.5 percent.32. Approximately 57 percent of all children in the United States are living in homes that are either considered to be either "low income" or impoverished.33. In the United States today, somewhere around 100 million Americans are considered to be either "poor" or "near poor".34. In October 2008, 30.8 million Americans were on food stamps. Today, 46.7 million Americans are on food stamps.35. Approximately one-fourth of all children in the United States are enrolled in the food stamp program.36. Right now, more than 100 million Americans are enrolled in at least one welfare program run by the federal government. And that does not even count Social Security or Medicare.37. According to the U.S. Census Bureau, an all-time record 49 percent of all Americans live in a home where at least one person receives financial assistance from the federal government. Back in 1983, that number was less than 30 percent.
What makes all of this even more frightening is that many homeless shelters and food banks around the nation are so overloaded at this point that they are already over capacity. Just consider this example...

When Janice Coe, a homeless advocate in Loudoun County, learned through her prayer group that a young woman was sleeping in the New Carrollton Metro station with a toddler and a 2-month-old, she sprang into action.Coe contacted the young woman and arranged for her to take the train to Virginia, where she put the little family up in a Comfort Suites hotel. Then Coe began calling shelters to see who could take them.Despite several phone calls, she came up empty. Coe was shocked to learn that many of the local shelters that cater to families were full, including Good Shepherd Alliance, where Coe was once director of social services.“I don’t know why nobody will take this girl in,” Coe said. “The baby still had a hospital bracelet on her wrist.”

Keep in mind that Loudoun Country is smack dab in the middle of one of the wealthiest areas of Virginia.
So if things are that bad in the wealthy areas, exactly how bad are things getting in many of the poorer areas?
Unfortunately, things continue to get worse for this economy. DuPont has just announced plans to eliminate 1,500 jobs. There are more major layoff announcements almost every single day. So how bad will things get when our crumbling economic system finally collapses? When kind of chaos will be unleashed all over the nation when millions upon millions of Americans finally lose all hope?
In the introduction to this article, I mentioned that one of my regular readers has had his lights turned off. The following is how he described his situation...

No gas, no water, no electricity at my house. Couldn’t pay the bills. I’m broke. Desperately searching for any means of income, or at least enough cash to get the juice (electricity) restored.Typing this missive in a dark house using the battery on my laptop. Feels like I’m camping out at home. Hope to get this situation fixed tomorrow… somehow. Needless to say, I *…. hate this.I was ready for this, but it is still a major league inconvenience. For those of you who DO have power, etc. – and are not ready… oh brother. You need to get ready. Seriously, you do. Because what I’m going through is just an inconvenience. It may someday be a normal occurence. Ugh. (expletives deleted)

Hopefully a way can be found to get his situation turned around, but the truth is that there are tens of millions of other similar stories out there in America today.

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The Four Horsemen Have Saddled Up

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